Transcript Management Issues in Stakeholder Managed Businesses and Co

Management Issues in
Stakeholder Managed
Businesses and
Co-operatives
Focusing on Sundance
Renewables
Borzaga and Solari
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Working with a very broad definition of social
enterprise: ‘essentially a (private) organization
devoted to achieving some social good’
Social enterprises largely in contradistinction to the
public sector in providing public services, but with
particular ‘positive externalities’, i.e. knock-on
benefits such as ‘an enriched service, such as more
hours of care or a different interpersonal approach’
Acknowledge the ambiguity of the term ‘social good’
Concerns about the efficiency and effectiveness of
social enterprises
Multi-stakeholder nature of social enterprises makes
them face particular problems in balancing interests
Challenges?
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Legislative and regulatory environment
Quality of product and employee skills
Management expertise and support
Financing
Networks and co-operation
Governance structures
People challenges
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‘Different management styles are requierd to
maintain a competitive advantage based on
workers’ commitment and involvement’
‘The value-driven employee of a social
enterprise wants it to manifest a consistent
set of values, norms and organisational
practices A new governance and
organisational form is needed . . .’
Characteristics of new
governance form?
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Greater autonomy
Participatory decision-making
Respect for people and their expectations
Balance between efficiency and social
mission
Closer attention to customers and society
Ownership—economic and psychological
Emotional and technical leadership
Fulfilment of array of personal needs and
desires
HRM in social enterprises
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SEs are usually labour-intensive
Importance of ‘intrinsic rewards’
Psychological contract between employees
and organisations is different in nature
Balance between extrinsic incentives (pay,
flexibility of work hours) with intrinsic
(participation, autonomy, moral values)
Distributive justice: balance between effort
and incentives
Flatter hierarchy
How does this apply to
Sundance?
What are multi-stakeholder
processes?
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Term grew out of the Rio Earth Summit in
1992
Intrinsically linked to sustainability
Kofi Annan (2000): need for ‘more active
cooperative management’
‘Stakeholders are those who have an interest
in a particular decision, either as individuals
or representatives of a group’
Key values and ideologies of
MSPs
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Sustainable development
Good governance
Democracy
Participation
Equity and justice
Unity in diversity
Leadership
Governance at Suma
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Separate the board from the executive: the Management
Committee, as the elected (non-executive) directors, have
authority over the Function Area Coordinators, who are the
executive managers (effectively the executive directors)
But there is a dynamic dialogue between the two; neither can
operate without the other
Ongoing relationship between the MC and the general meeting of
member shareholders so that, in contrast to the single AGM of
most companies, Suma has six GMs a year
MC can only operate with impunity for a maximum period of three
months at most,
Executive managers at Suma are answerable at least on a
weekly basis to MC.
Consequences
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Separation between the democratic governance of
the cooperative and the executive management of
the business
Authority of members is clearly defined and it is only
operational when they sit together as GM
Otherwise they relate to the business as employees
subject to the executive management culture they
have chosen democratically
In collectives member employees refuse instructions
from colleagues giving rise to a ‘stop – go – stop’
style of management
Most collectives suffer from the problems of most
small partnerships of equals – the tyranny of the
individual veto.
Network governance
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Response to lack of accountability and
inefficiency in private sector and
unresponsiveness and bureaucracy in public
sector
Size of global businesses and power of
CEOs reduces accountability
Importance of human scale
Public disillusion with business
Rational for network governance
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Network organisations introduce internal
interdependence to provide a rational basis for
developing trust, cooperation and greater operating
efficiency
They also introduce internal competition for job
satisfaction and other self-interests
Unlike command and control hierarchies, network
organisations allow individuals to utilise their
contrary nature to be competitive/cooperative,
suspicious/trusting, self-interested/altruistic and so
on
These are nature's way of introducing the checks
and balance required for efficiently sustaining the
self-regulation of social creatures
Advantages . . .
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Self-interest of executives harnessed to further the
public good by introducing contestability for senior
positions
Internal competition for control provides a much
better informed, sensitive and efficient mechanism
to improve the operations of a business than
competition for control through the stock market.
A compelling basis for replacing corporatisation,
privatisation or public-private partnerships as a
means for increasing economy, efficiency, and
effectiveness of social enterprises.